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Income Tax Appellate Tribunal, “B” BENCH : KOLKATA
Before: Hon’ble Shri J.Sudhakar Reddy, AM & Hon’ble Shri S.S.Godara, JM]
ORDER Per J.Sudhakar Reddy, AM
This appeal by the Assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-2, Kolkata (hereinafter the ‘ld. CIT(A)’), dt. 04.01.2017 passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’) for the assessment year 2012-13.
The assessee is a company and is in the business of investment in shares. It filed its return of income for the assessment year 2012-13 on 18.03.2013. The assessing officer passed an order u/s 143(3) on 25.03.2015 making an addition u/s 68 of the Act as well as u/s 14A of the Act. Aggrieved the assessee carried the matter an appeal. The Ld. CIT(A) passed an ex parte order, as admittedly no notice could be served on the assessee. Aggrieved the assessee is in appeal before us.
M/s Prayash Dealcom Pvt. Ltd. A.Yr.2012-13 3. The ld. Counsel for the assessee Mr. S. Jhajharia submitted that, the assessing officer has passed an order without giving sufficient opportunity to the assessee and without making proper verification as required under law. He submitted that a routine order was passed without serving notices on the assessee. He pointed out that in similar cases the Kolkata Bench of the Tribunal has been remanding the matter to the file of the AO for fresh adjudication in accordance with law. He prayed that this appeal may also be set aside to the file of the ld. AO.
The ld. DR Mr. S.N. Das on the other hand, opposed this contention and submitted that, the appeal may restore to the file of the Ld. CIT(A), as non-speaking order was passed by him.
After hearing rival submissions and on a careful consideration of the facts and circumstances of the case, a perusal of papers on record and orders of the lower authorities below as well as case law cited, we hold as follows.
The assessing officer held as follows: “2. In response to the said notices, Shri Pratik Kesara, AR of the assessee-company made initial compliance and did not file any more details. Assessee failed to submit/produce/explain all the details/documents as asked for.”
The AO has passed the order including the disputed additions as the ground that the assessee has not provided the detail despite sufficient opportunity. The Ld. CIT(A) was issued to the assessee on 05.03.2015. The assessee states that it had not received this notice. As the assessee had not filed an explanation, the addition has been made. The AO in our view has not conducted the required enquiries in this case. The Ld. CIT(A) passed an ex parte order. The appeal was not disposed off on merits.
M/s Prayash Dealcom Pvt. Ltd. A.Yr.2012-13 7. Under the circumstances we deem it fit and appropriate to set aside this appeal to the file of the AO for fresh adjudication in accordance with law by following similar decision of this Bench of the Tribunal in the case of Sriram Tie Up Pvt. Ltd. supra at para 6 and 7 held as follows: “6. In the case of M/s. Sukanya Merchandise Pvt. Ltd. vs ITO (ITA 291/Kol/2016 dated 15.12.2017) cited by the learned counsel for the assessee, a similar view has been taken by the Co-ordinate Bench of this Tribunal and the similar issue relating to the addition made under section 68 on account of share capital contribution by treating the same as unexplained cash credits is restored back by the Tribunal to the file of the A.O. in almost similar situation after recording its observations / findings as under:
We note that the AO pursuant to the order of Ld. CIT had taken note of the directions of the Ld. CIT and issued notice u/s. 142(1) dated 16.08.2013 and has acknowledged that the assessee had furnished the copy of final account, I. T. Acknowledgement, bank statement for the relevant period evidencing the receipt of share application money from the share applicants. Thereafter, the AO makes certain inferences based on the list of shareholders and taking note of the bank statement furnished by the assessee. We note that after the initial notice dated 16.08.2013, thereafter the AO had issued the notice on 26.02.2014 which has been reproduced at page 3 of the reassessment order, wherein AO required the directors of the assessee company to be present before him on 06.03.2014. However, according to the Ld. AR, the assessee received the notice only on 07.03.2014 and thereafter, the assessee requested the AO to provide another opportunity of hearing vide its letter dated 20.03.2014. Thereafter, the AO fixed the date of hearing on 12.03.2014 vide notice dated 10.03.2014. So, according to the assessee company since the directors were not in station till 23.03.2014, the Ld. AR had requested for adjournment till that time. Though the AO has stated that he has issued summons on 24.03.2014 to the assessee company to produce the directors of the company before him on 26.03.2014, the assessee company contended that it has not received the said summon and, therefore, could not make the personal appearance. The AO has drawn adverse conclusion basically because of non-appearance of the directors of the assessee company and that of the shareholder companies. We note that initially the AO started the enquiry on 16.08.2013 which was complied by the assessee by submitting documents which has been acknowledged by the AO. Thereafter, the enquiry was started only at the fag end of February 2014 and the assessee company had informed the AO that their directors were out of station till 3 M/s Prayash Dealcom Pvt. Ltd. A.Yr.2012-13 23.03.2014. In the light of the aforesaid facts, we are of the opinion that the assessee did not get fair opportunity to present the evidences before the AO so, there was a lack of opportunity as aforesaid, therefore, it has to go back to AO.
8. We also note that Ld. Cit while setting aside the order of the AO which was passed u/s. 147/143(3) of the Act, the Ld. CIT gave certain guidelines to follow for conducting deep investigation. We also note that similarly placed assessees had challenged the exercise of revisional jurisdiction u/s. 263 of the Act before this Tribunal in those cases one of it of Subha Lakshmi Vanijya Pvt. Ltd. Vs. CIT in dated 30.07.2015, wherein the Tribunal was pleased to uphold the order passed by the Ld. CIT passed u/s. 263 of the Act, which we learn to have been confirmed by the Hon’ble jurisdictional High Court and the SLP preferred against the decision of the Hon’ble jurisdictional High Court has been dismissed by the Hon’ble Supreme Court. Therefore, similar order of the Ld. CIT passed u/s. 263 of the Act has been upheld. We note that the AO while giving effect to the CIT’s 263 order has noted that the assessee company has in fact furnished the documents sought by him to his notice u/s. 142(1) of the Act. However, the AO took the adverse view against the assessee on the plea that the directors of the assessee company and share subscribing companies had not appeared before him on 26.03.2014 and t after taking note that none appeared on 26.03.2014 concluded on the same day 26.03.2014 that entire amount of share application money received along with premium amounting to Rs.8,06,00,000/- which has remained unexplained and added to the income of the assessee. We also note that the Ld. CIT after looking into the pernicious practice of converting black money into white money has given the guidelines to AO as to how the investigation should be conducted to find out the source of source. Since similar order of the Ld. CIT passed u/s. 263 of the Act has been upheld by the Tribunal as well as by the Hon’ble Calcutta High Court as well as the SLP has been dismissed by the Hon’ble Supreme Court, similar order of the Ld. CIT has to be given effect to as directed by the Ld. CIT. We take note that the Ld. CIT with his experience and wisdom has given certain guidelines in the backdrop of black money menace should have been properly enquired into as directed by him. The AO ought to have followed the investigating guidelines and method as directed by him to unearth the facts to determine whether the identity, genuineness and creditworthiness of the share subscribers. We note that the Hon’ble Supreme Court in three judges bench in the case of Tin Box, (supra), has held that since there was lack of opportunity to the assessee at the assessment stage itself, the assessment needs to be done afresh and thereby reversed the Hon’ble High 4 M/s Prayash Dealcom Pvt. Ltd. A.Yr.2012-13 Court, Tribunal and CIT(A)’s orders and remanded the matter back to AO for fresh assessment. So, since there was lack of opportunity as aforestated it has to go back to AO. We also note that the Hon’ble Delhi High Court in the case of CIT Vs. Jansampark Advertising & Marketing Pvt. Ltd. in dated 11.03.2015 wherein after noticing inadequate enquiry by authorities below have held as under: “41. We are inclined to agree with the CIT(Appeals), and consequently with ITAT, to the extent of their conclusion that the assessee herein had come up with some proof of identity of some of the entries in question. But, from this inference, or form the fact that the transactions were through banking channels, it does not necessarily following that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established.
The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT(Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the fact of the allegations of the Revenue that the account statements reveal uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a 'further inquiry’ in exercise of the power under Section 250(4). His approach not having been adopted, the impugned order of ITAT, and consequently that of CIT(Appeals), cannot be approved or upheld." In view of the aforesaid order and in the light of the Hon’ble Supreme Court’s decision in Tin Box Company (supra) and taking into consideration the fact the order of the Ld. CIT passed u/s. 263 of the Act in similar cases being upheld up to the level of Apex Court, and taking note of Hon’ble Delhi High Court’s order in Jansampark Advertising & Marketing Pvt. Ltd. (supra), we set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment and to decide the matter in accordance to law after giving opportunity of being heard to the assessee.
M/s Prayash Dealcom Pvt. Ltd. A.Yr.2012-13 7. We, therefore, consider it fair and proper and in the interest of justice to set aside the orders of the authorities below on the issue in dispute and restore the matter to the file of the A.O. to decide the same afresh after giving the assessee proper and sufficient opportunity of being heard and after taking into consideration the entire evidence already available on record as well as other documentary evidence which the assessee may choose to file in support of its case on the issue.”
The assessee is directed to cooperate with the assessing authorities in disposing off the appeal.
In the result, this appeal of the assessee is allowed for statistical purpose.
Order pronounced in the Court on 27.06.2018